The Federal Energy Regulatory Commission (FERC) gave Iroquois’ $174 million Eastchester Expansion Project its preliminary approval on non-environmental grounds yesterday. The 33-mile pipeline expansion is designed to deliver 230,000 Dth/d mainly to power generators in New York City. It will connect Iroquois’ existing system in Suffolk County with Consolidated Edison’s system in the Bronx. Iroquois hopes to complete the pipeline extension by November 2002.

Iroquois signed firm 10-year agreements for the capacity with five shippers: Virginia Power Energy Marketing (20,000 Dth/d), Mirant New York Management (60,000), KeySpan Ravenswood (60,000), Consolidated Edison Energy (30,000) and Orion Power Holdings (60,000). ConEd, KeySpan and Orion will use their capacity to serve power generation load.

FERC denied Iroquois’ request for rolled-in rate treatment, stating that, contrary to Iroquois’ claims, the project’s cost actually would exceed its revenues, requiring existing firm shippers to subsidize a portion of the project. Iroquois had said the project would provide $2.8 million in annual net financial benefits, but FERC found that it actually would cost existing shippers $2.9 million. As a result, the Commission left the rates to be settled in a future proceeding.

“We find that with an incremental fuel charge, the Eastchester Project can proceed without subsidies from, or degradation in service to, Iroquois’ existing shippers and that the project will provide systemwide benefits,” FERC concluded. “Notably, the Eastchester Project will allow Iroquois’ existing customers to have secondary access to a new, large marketer with no additional costs. In addition, the Eastchester Project facilities will be fully integrated into Iroquois’ existing system and will be used to effectuate deliveries to customers throughout the system in the most efficient manner.” FERC added that the project also will increase the reliability of the gas grid in New York and provide a new supply source for gas-fired generators.

Iroquois Gas Transmission System is a partnership of 10 U.S. and Canadian energy firms, and is owner of a 375-mile interstate pipeline extending from the U.S.-Canadian border at Waddington, NY, through western Connecticut to Long Island, NY.

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